Patti Hart writes that one agency highlights the link between Perry and his donors

In its brief but controversial life, the Texas Residential Construction Commission won far more detractors than admirers. Former Comptroller Carole Keeton Strayhorn called it “a builder protection agency” that created additional roadblocks for homeowners living with shoddy construction. To Rep. Garnet Coleman, D-Houston, the agency served only “to shield home builders from being responsible” for defective work. The Texas Sunset Commission concluded the agency did “more harm than good.”

The TRCC, however, had at least one friend who mattered: Houston homebuilder Bob Perry, who has given Gov. Rick Perry more than $2.5 million during his tenure in office. An advocate for the agency from its creation in 2003 until it closed its doors in 2010, the homebuilder’s imprimatur was significant. His lobbyists played a key role in its inception; his company’s general counsel, John Krugh, was appointed to serve on the commission by Gov. Perry, no relation to Bob Perry, one month after the homebuilder gave a $100,000 campaign contribution to the governor.

Now dormant, the TRCC serves as a case study of how wealthy contributors can shape public policy. In this year’s hard-fought Republican presidential primary, the agency likely will get renewed scrutiny as Perry’s Republican competitors search for ways to distinguish themselves from the Texas governor. In a speech last week in Iowa, former Alaska governor Sarah Palin took aim against career politicians who reward their campaign contributors with government favors.

“There is a name for this. It’s called ‘corporate crony capitalism,’ ” she said. “I believe in the free market and that is why I detest crony capitalism. And Barack Obama has shown us cronyism on steroids. It will lead to our downfall if we don’t stop it now.”

While Palin won applause from her conservative audience by focusing on the president, many political observers believe her remarks were aimed at another target: Rick Perry, whose lengthy tenure in office leaves him vulnerable to the charge he has rewarded campaign contributors with government favors. She raised a question central to the GOP’s mission: If Republicans hope to defeat Obama because he engages in “crony capitalism,” is Perry the right candidate to carry that message?

“When she said ‘crony capitalism,’ who else could it be? It had to be Perry,” said Dr. Larry Sabato, director of the University of Virginia’s Center for Politics. “She mentioned Obama, but whoever wrote her speech, it had a Republican dimension to it.”

‘Everybody does it’

To Sabato, the salvo from Palin provided evidence that the Republican contest was far from decided. He expressed doubts, however, that Palin or other Perry opponents would make much headway with the “crony capitalism” charge.

“People are cynical,” he said. “Basically, people expect a certain level of corruption from all high officials. After all, you can go through and name probably 200 individuals that Obama has appointed who gave him big contributions. People shrug their shoulders and say ‘everybody does it.’ ”

Sheila Krumholz, director of the bipartisan Center for Responsive Politics which tracks campaign finance issues, agreed that Perry is “helped by the fact that this is the system by which all candidates raise money and the system in which they operate.”

However, she added, “I do think there are lines in the sand which, when candidates cross them, they do so at their peril. There have been instances of a scandal or perceptions that candidates in the pocket of specific interests and that will be fodder for their opponents. I don’t think he can count out the ire of the voters.”

Inherent conflict

To Texas lawmakers of both parties, the TRCC crossed that line of propriety.

“This was a reward,” said Rep. Jessica Farrar, D-Houston, who fought to shut down the agency. “Bob Perry gave a ton of dough and got rewarded.”

But Anthony Holms, a spokesman for the homebuilder, said it was “absurd” to link the creation of the agency to campaign contributions to the governor. “A state agency in Texas can only be created by 181 Democrats and Republicans,” he said, referring to the Texas Legislature.

The creation of the agency meant that consumers with complaints of poor workmanship had to go first to the agency for dispute resolution, instead of the courthouse. Farrar said that in practice, that meant “consumers lost a lot of rights.”

A state Sunset Commission report bears out that charge: Before lawmakers ultimately decided to end its existence, the TRCC resolved only 12 percent of its cases to the satisfaction of consumers. The rest wound up going to court, the report noted, “the very outcome” the TRCC was supposed to avoid.

Sen. Bob Duncan, R-Lubbock, initially supported creation of the agency, but became dismayed when Perry appointed Krugh to the commission. While on the commission, Krugh worked actively against legislative changes that many believed would have made the TRCC more responsive to consumers.

The Texas Senate confirmation hearing for Krugh illustrated the inherent conflict in naming Bob Perry’s lawyer to the commission. Duncan asked Krugh about his opposition to legislation that would have made the agency more consumer friendly. When Krugh replied that he opposed them “as a builder,” Duncan admonished him.

“I’m asking you to take off your builder hat. When you are sitting on this commission, you are sitting in a fiduciary (capacity) for the State of Texas. You have to make decisions based on … what’s fair and balanced, not what’s in the best interests of the builder.”

Krugh, who no longer works for Perry Homes, could not be reached for comment, but in a 2005 interview with Texas Monthly, he said he hoped the agency would help homeowners avoid costly and unpredictable litigation. “The old system drove them to their lawyers and their experts and they got caught up in what I call this vortex of litigation, and they couldn’t get out,” he said. “The third-party intervention at least gives the homeowners some control over what goes on before they get caught up in that vortex.”

Consumer complaints

A few years later, however, when the Sunset Commission examined the TRCC’s operations, it got a barrage of consumer complaints, sharing their experiences with the agency.

“We as Texans are faced with another layer of government that has no power to enforce construction standards and can not resolve homeowner’s construction complaints,” wrote one dissatisfied home owner. “I have incurred additional legal and expert fees throughout this entire process and I am back to where I would have started prior to the establishment of the TRCC – that is before the court to resolve this dispute.”

Another Houston area homeowner reported that the commission often overturned the findings of its own experts. “The TRCC inspector ruled in (the home owners’) favor but once again, the builder whined and the judgment was overturned in favor of the builder. There seems to be a pattern of certain builders whining like babies and TRCC obliging them.”